advantages and disadvantages of debt counselling

If you are struggling with your debt and considering debt counselling, it’s best to weigh up the advantages and disadvantages of debt counselling so that you can make sure that you are optimally informed and educated. This is why we decided to compile a list of the advantages and disadvantages of debt counselling, giving you all the information you need to change the course of your life.

Advantages of debt counselling

All of your debt repayments will be consolidated into one reduced monthly repayment plan.
Instead of paying monthly instalments on numerous accounts( which you can easily lose track of) you will pay only one reduced monthly installment.

You will have more money left to live on
By paying less on your debt installments, you will have more money available for your everyday living expenses like food, electricity and transport.

Your assets, including your home and car, will be protected from repossession
If you’re fearing that your home and car will be repossessed because you’re in too deep, you’re not alone. This is one thing that consumers under debt review with a valid court order do not have to worry about, as all your assets are legally protected from repossession by your creditors whilst you are paying off your debt.

Credit providers may no longer harass you
Instead of avoiding calls from numbers that you don’t recognize because you are fearful of creditors seeking payment – you can now answer, and with confidence tell your creditors to deal directly with your debt counsellor.

You can’t get further into debt
Once placed under debt review, you will no longer be at risk of getting deeper into debt, as you will no longer have access to debt.

Disadvantages of debt counselling

You may not qualify for debt counselling
If, after assessing your income and expenses, your debt counsellor determines that you are not over-indebted, you will be issued with a rejection letter and you will then have to pay a rejection fee. According to the National Credit Act (NCA), one of your options is to personally approach a magistrate’s court to apply for a court order that declares you as over-indebted.

You could get caught by unregistered debt counsellors
Your efforts to financial freedom may turn out to be in vain if you opt for an unscrupulous, unregistered debt counsellor. If you have any doubts, simply ask for their registration number and looking them up on the National Credit Regulator’s (NCR) website. Professional debt counselling firms are required by law, to register with the NCR.

Feel free to confirm NDAs NCR authorisation number: NCRDC2351. Rest assured, NDA is compliant with the National Credit Act and all of our services are regulated by the NCR.

Debt counselling may not cover all of your debts
If one of your credit providers has already commenced legal proceedings against you as a result of missed payments, your debt counsellor will not be able to include these debts in your new debt repayment plan.
In light of this, always be sure to contact NDA as soon as you begin to struggle with your payments, so that all of your instalments can be reduced.